Reading Stats

Reading Stats

My father worked for the New York Post in distribution (Did you ever wonder how newspapers got to those little kiosks in New York City? That was my Dad!) He’d read all the daily papers and compare the stories on the train coming home. He called it “comparing the lies.” We’d discuss them over dinner.
Early in my tenure at Boston.com Real Estate Now (BREN), I saw a perfect example of bad writing leading readers in the wrong direction. It was this AP article on housing, titled Pending home sales index falls 3.5%

I feel grateful for being taught how to read a newspaper. My father taught me:

When faced with statistics, read the entire article before looking at the numbers. Figure out what is relevant to you. Then, look at the figures and try to understand their logic. In this article, I do not even need to understand the economic information because I can read what is relevant to me, — and to you, the buying public – a little more than halfway down the page:

“Pending home sales rose in the West and Northeast, the association said, but fell in the South and Midwest.” Anyone who read just the headline or the first half of the article got the entirely wrong idea of what is happening in the Northeast (and West.)
Economic “news” is poorly written for those who do not read the whole article. The headline says down, the local news is that it is up. That’s not the only problem. Sales volume (how many houses changed hands) and sales price are often mixed up in real estate reporting. Readers need to discern whether volume or price is being discussed.

In this case, the stats are about sales volume (number of pending sales) not price. When sales volume goes up or down, it indicates a problem with either the amount of supply or the amount of demand. Whether volume goes up or down is not a predictor of price unless you understand why sales volume is changing. If it is changing because of low demand, prices may soon be going down. If it is changing because of low supply, prices may soon be going up.
Get it? If not, ask questions. If you get it, you can ask other questions!

By | 2016-12-28T14:01:19+00:00 August 4th, 2011|Categories: House Hunting, Rona|

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